It’s Now or Never: India Has the Potential to Match or Even Leapfrog the US, China, and Other Countries in AI
Founder, Director of Avaali Solutions Pvt Ltd, Ms. Srividya Kannan’s article published in cxotoday website.
Artificial Intelligence is transforming economies globally, and India stands at a turning point. As the government accelerates AI investment, global collaborations grow, and domestic AI capability builds up, India has the potential to leapfrog China and become a global leader in AI innovation.
The Changing AI Landscape: India vs. China vs. the US
India’s AI market is expected to reach $8.30 billion in 2025, growing at 27.86% CAGR to reach $28.36 billion by 2030. While impressive, India still lags behind China’s projected $45.45 billion in 2025 and $154.80 billion by 2030. The US, the world leader, is likely to lead with a $66.21 billion market size in 2025. AI leadership is not merely a matter of market size; it’s about strategic investments, innovation, and ecosystem preparedness.
India’s Strategic AI Drive: Policy, Investment, and Infrastructure
India is building its own foundational AI model supported by the India AI Compute Facility with 18,693 GPUs, making it one of the most extensive AI compute infrastructures globally. The initial phase has already made 10,000 GPUs available.
In March 2025, India unveiled AI Kosh, a library of non-personal data sets to help companies build large language models. The cost per GPU per hour in India will be ₹67 (approximately $0.77), compared to the global cost of $2-2.5, making it among the lowest in the world.
Significantly, India has begun work to develop its own GPUs, and five semiconductor plants are already under construction to support this vision. This initiative aims to reduce reliance on imported technology, as India currently depends on US tech firms for these critical components.
AI as a Diplomatic and Strategic Tool
India’s AI aspirations extend beyond economic gains; AI is increasingly becoming an important instrument of geopolitical strategy. India’s growing cooperation with global leaders through the US-India Initiative on Critical and Emerging Technologies (iCET) and alliances with Japan, the UK, and the EU reflect its determination to shape AI governance and innovation.
The intensifying AI collaboration between India and the US under the TRUST Initiative provides significant advantages for both nations. The US-India AI Infrastructure Roadmap will enhance India’s capabilities by facilitating knowledge transfer and technological expertise. During the AI Action Summit in Paris, Prime Minister Modi reaffirmed India’s commitment to responsible AI development, emphasising AI for social good, closing accessibility gaps, balanced global governance, and energy-efficient AI models.
Unlike China’s predominantly state-led, closed AI system, India’s model based on international partnerships, private-sector innovation, and democratic regulation offers long-term strategic benefits. This approach fosters greater transparency and innovation diversity, which are crucial factors for sustainable AI leadership in the global arena.
AI Integration with Digital Public Infrastructure and Global Collaborations
India’s Digital Public Infrastructure (DPI) has redefined digital innovation by combining public funding with private sector-led innovation. Platforms like Aadhaar, UPI, and DigiLocker serve as the foundation, while private entities build application-specific solutions on top of them. This model is now being enhanced with AI, integrating intelligent solutions into financial and governance platforms. A practical demonstration of this integration was seen during the Mahakumbh, where AI-driven DPI solutions played a crucial role in managing the world’s largest human gathering.
India’s AI Models & Data Infrastructure for Digital Economy
India is developing its own foundational models, including Large Language Models (LLMs) and problem-specific AI solutions tailored to Indian needs. The government has launched several notable initiatives, like:
- Digital India BHASHINI: An AI-led language translation platform designed to enable easy access to the internet and digital services in Indian languages.
- BharatGen: The world’s first government-funded multimodal LLM initiative, launched in 2024, aims to enhance public service delivery and citizen engagement through foundational models in language, speech, and computer vision.
- Sarvam-1 AI Model: A large language model optimised for Indian languages with 2 billion parameters, supporting ten major Indian languages.
- IndiaAI Dataset Platform: This platform houses a large collection of anonymised data, empowering Indian startups and researchers to develop advanced AI applications across sectors like agriculture, logistics, and more.
Challenges Ahead
Despite robust momentum, India faces structural and technical challenges. AI models still struggle with accuracy and trustworthiness in mission-critical applications. Widespread deployment requires substantial computing power and data infrastructure, which remains a work in progress. Additionally, the high cost of developing next-generation AI models presents a significant hurdle for affordable innovation.
The Road Ahead
Enterprises, academia, and the workforce are embracing AI technologies at an accelerating pace. Universities are establishing specialised AI centres and updating curricula to align with industry needs. The Indian workforce is rapidly upskilling, creating a talent pool that combines technical expertise with domain knowledge.
This convergence has positioned India as a preferred location for Global Capability Centres, with international corporations establishing AI research centres attracted by skilled talent, cost advantages, and the vibrant innovation ecosystem.
India’s democratic framework provides an additional advantage. The country’s approach to AI development, characterised by transparency, inclusivity, and ethical considerations, aligns better with global governance frameworks compared to more closed models.
The coming years will be critical for India’s AI aspirations. Success will depend on effectively coordinating policies, investments, and collaborations while addressing infrastructure gaps and ensuring responsible AI use. If executed properly, India can not only catch up with global leaders but establish a new paradigm for AI leadership, one that balances technological advancement with social inclusion and ethical considerations.